PN: Can you give us an overview of the insurance industry after the economy was formally dollarised?
DH: For short-term insurance, more people are now insuring since the economy was dollarised. However, their premiums are low because of competition and people now appreciate the value of the US dollar and how it works. During the period under review, we have seen more claims although underwriting capacity is still low. There are too many players but with low capital on the market. With short term insurance there is no legacy business, once a policy has expired, one has to renew. Altfin Insurance should be in the top five among the short term players.
For long term insurance it has been slow because of legacy issues. The value of a policies acquired in the Zimbabwean dollar era and converted to the US dollar were very minimal. More could be done to explain to customers how this was converted, besides investments were held locally. There was no opportunity to hedge outside the country hence the low figures. The sector is recovering although not at a fast rate because its recovery is correlated with the performance of the whole economy. There are few players in long term insurance unlike in the short term. It is important to note, long term business is crucial for the business and the country, therefore savings from the local will go a long way in bringing back our economy on track.
PN: As an industry when do you think will be the right time to re-introduce the Zimbabwe dollar? Would you prefer this arrangement for a long time?
DH: There is no right or wrong time to re-introduce the local currency. I know most people have avoided answering this question. It is important to note that it is unusual for a country that would have dollarised to undollarise. Even if the local currency is to be reintroduced, people will still transact using multi currency. Our currency must have value if it is to be accepted. If as a country we start exporting goods with meaningful values of between US$5 –US$6 billion, might talk about the reintroduction of the local currency as it will be supported by a strong base. There must be significant growth in all sectors to ensure that its value (local currency) is sustained. However if the local currency is to be reintroduced, it will be used for convenience of trading.
PN: What have been the challenges of the insurance business in Zimbabwe in 2010?
DH: Low confidence among the public, low benefits and pensions because people do not have other incomes other than salaries. Clients are now more particular with whom they are insuring with. The credibility of the insurer, their balance sheet, and promptness in honoring claims is what clients look at these days. As Altfin, we have managed to ensure we deliver value for all our clients.
PN: Looking at pension funds, how has the business environment been considering that many companies are retrenching staff while others are closing shop?
DH: Most employers want to be involved but they cannot afford. Salaries are low and below (pensionable allowance). Some people do not believe in pension because they are not attracted to the low values one gets when they retire. There are still a number of unclaimed benefits from the Zimbabwean dollar era, although they are low, but it is important for people to collect their claims.
PN: You are a fellow of the Faculty of Actuaries of Scotland and also hold a BSc Honours Degree in mathematics (UZ). What does an actuary do and how is the actuary business in Zimbabwe?
DH: It is now called the Institute faculty of Actuaries after combining with the Actuaries of London. Actuaries are trained to estimate outcomes of uncertainties or events that help business and companies. They give advice on what to do to ensure that the situation is manageable and controlled.
Actuaries review statistical information relating to rates dealing with mortality, sickness, accidents, disability and retirement. They will take the information that they obtain from reviewing statistical data and relay the information to individuals who need such items to successfully pursue insurance-related interests. The general role of the actuary is to compile the data which they collect in such a manner that it helps companies deal with payment and coverage issues. In Zimbabwe many people and businesses cannot afford rates charged by actuaries, resulting in them reducing their fees. Consequently some have left the country because of low returns seeking greener pastures.
DH: Not only government bonds, but also absence of long term bonds has negatively affected the industry. Most of the funds are invested in equity and property. The absence of such bonds has effected paying out claims.
PN: How big is Altfin Insurance Company (AICO) and Altfin Life Assurance (ALAC) market share?
DH: Returns for last year have not yet been released by the Commissioner but we are in the top five for the short term side, however we are targeting to be in the top three in the near future. We have also introduced a new baby to the Group Altfin Health Medical Aid Scheme. The Medical Aid is about eight months but is rapidly growing as it is offering tailor made solutions. This division came about as a need for innovations and as a result of our drive to provide a complete insurance solution to our clients.
PN: Your appointment came after the company had undergone restructuring and operates now a life insurance company. Looking at the Insurance Company figures a year before you came on board and when you became part of the team, what would you say with regards to the company’s operations and growth?
DH: There was one business unit when Altfin started but now the company has grown significantly to three business concerns. We are in a growth phase and expect to continue in this mode for the next three to five years. We want to be in the top two in our industry, in all areas of our business. Currently we are leading in offering new products, services and solutions.
PN: Does the company have any plans to list on the Zimbabwe Stock Exchange?
DH: In the medium to long term, we want to create value before we become a public company.
PN: Who is Douglas Hoto and what inspires and motivates him?
DH: I sit on a number of boards including charitable organisations and during my career I have recorded a number of milestones. I am inspired by working against adversity because of my background.
I use my professional position to better the lives of many people around me. These days I am motivated by giving to the less privileged, be it at personal and community level.
I feel most professionals, including myself, have let the country down. At the right time I want to take a centre stage in the public affairs of this country and offer my services. We need suitable leaders and businesses to lead the country without worrying about political affiliation. This is one area which has greatly affected our country.
I am also motivated by seeing people around me achieve and realise their dreams and I am glad that most actuaries we have in the country have passed through my hands.